Asked by: Mhairi Black (Scottish National Party - Paisley and Renfrewshire South)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what steps her Department is taking to support low earners to save for retirement.
Answered by Guy Opperman
Automatic enrolment has reversed the decline in workplace pension saving. Latest figures show that over 10 million workers have now been automatically enrolled into workplace pension by more than 1.4 million employers. By 2019/20 an estimated extra £18.4 billion a year is estimated to go into workplace pensions as a result of Automatic Enrolment.
Automatic Enrolment has been particularly successful for those groups who were once poorly served or excluded from workplace pension saving, including lower earners. The largest increase amongst income groups in workplace pension participation (an increase from 20% to 72%) between 2012 and 2017, being amongst eligible private sector workers earning between £10,000 and £19,999.
The Government is committed to building on the success of Automatic Enrolment. The 2017 review sets out our ambition for the mid-2020s, with proposals to strengthen financial resilience for young people and lower earners, including those who have multiple part-time jobs. However, we will not force the pace of change in Automatic Enrolment and want to understand properly the impact of the 2018 and 2019 increases in minimum contribution rates, and work with stakeholders to build the consensus on which the success of Automatic Enrolment has been based, before committing to a timetable for the proposed changes.
In addition, low earners benefit from the rise in the living wage, the increase in the tax threshold and free 15-30 hours childcare support.
Asked by: Mhairi Black (Scottish National Party - Paisley and Renfrewshire South)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what steps her Department is taking to support people working in the gig-economy to save for retirement.
Answered by Guy Opperman
As set out in the 2017 Review of Automatic Enrolment, a large proportion of those working in the gig economy potentially already come within the scope of the Automatic Enrolment framework, if they meet the relevant eligibility rules including age and earnings criteria. The Pensions Regulator has a statutory objective to maximise employer compliance with the automatic enrolment obligations.
In addition, the Government set out its vision for the future of the labour market and ambitious plans for implementing the recommendations arising from the 2017 Taylor Review of Modern Working Practices. In its December 2018 Good Work plan the Government committed to legislate to improve the clarity of the employment status tests, reflecting the reality of modern working relationships.
We will ensure any changes are also considered in relation to Automatic Enrolment so that there is coherence and clarity for individuals and businesses about who is eligible for automatic enrolment, meaning as many eligible workers as possible can save for retirement.
The self-employed are able to opt in to Automatic Enrolment through the NEST Corporation, who have a Public Service Obligation to accept self-employed savers (since March 2018), and a significant number do so.
Asked by: Mhairi Black (Scottish National Party - Paisley and Renfrewshire South)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what steps her Department is taking to support self-employed people to save for retirement.
Answered by Guy Opperman
The UK self-employed population is a highly diverse group encompassing an estimate 4.75 million people. Finding effective, durable retirement saving solutions for self-employed individuals is a long-term challenge for our generation. As part of its 2017 Review of Automatic Enrolment, the Government committed to test targeted interventions aimed at establishing what works to increase retirement saving amongst the self-employed.
Our December 2108 report, ‘Enabling retirement savings for the self-employed: pensions and long-term savings trials’, provided a research and trialling programme, working with partners, to deliver a range of trialling activities from 2019/20. The initial trials will focus on testing whether or not certain types of messaging or marketing interventions can increase the propensity of the self-employed to save in a pension. Later trials will build on the findings and test the scope to make it easier to prompt and/or facilitates contributions through existing systems which many self-employed people use, such as invoicing services or accounting software.
Our objective is to use these trialling activities to inform and develop the evidence base, in order to identify effective policy interventions which can then be tested at scale in future.
In addition, low earners benefit from the rise in the living wage, the increase in the tax threshold and free 15-30 hours childcare support.